Fixed Costs

question 85

Multiple Choice

Fixed costs:

• A) change as a small quantity of output produced changes.
• B) are constant over the short-run regardless of the quantity of output produced.
• C) are defined as the change in total costs when one more unit of output is produced.
• D) are subtracted from sales to compute the contribution margin.
• E) can be ignored in scenario analysis since they are constant over the life of a project.

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Definitions:

Form 1120

Form 1120 is the tax form used by corporations in the United States to report their income, gains, losses, deductions, and credits to the IRS.

Subchapter S Corporation

A form of corporation that meets specific Internal Revenue Code requirements, allowing profits to be passed directly to shareholders and avoid double taxation.

Shareholders

Individuals or entities that own shares in a corporation, and therefore have an interest in its performance and governance.

Trusts

Trusts are legal arrangements where assets are held by one party for the benefit of another, often used for estate planning, tax reduction, and wealth management purposes.